Sources of contractor’s payment risks and cash flow problems in the New Zealand construction industry: project team’s perceptions of the risks and mitigation measures

Delay and loss of payment is a serious problem in the construction industry of many countries. These affect the cash flow of contractors which is critical to meeting their financial obligations. Payment defaults by the principal leads to insolvency of contractors and in turn other parts of the project chain. In recognition of some of these problems, most countries have established payment-specific construction industry legislation and other contractual measures to mitigate the problems, but nevertheless the problem persists. In this context, the paper examines the nature of payment problems in the construction industry in New Zealand. It is part of a larger study, that seeks solutions to payment losses in the construction industry.The study uses two approaches; an analysis of liquidators’ reports, and an analysis of court cases involving payment disputes to determine the magnitude of payment problems on construction parties. The findings are presented using simple descriptive and interpretive analyses. The study finds that trade creditors are impacted negatively (payment delays and losses) by the liquidation of property developers, general construction and construction trade companies. 75% of trade creditors are unable to be paid fully by these categories of construction companies after liquidation proceedings. Liquidation proceedings take an average 18 months before they are finalised. The analysis of court cases found that 80% of payment disputes are between principals and contractors; with considerably significant percentage of disputes resulting in outright loss of payments. Only 40% of the cases are successful, in which case claimants are able to fully recover the amount in dispute. Payment losses are more prevalent in liquidation than delays and unlike in legal disputes, there is no security for those losses. The study finds that construction parties use remedies contained in the security of payment provisions within standard conditions of contract, and legislative documents.

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Contractual risks in the New Zealand construction industry: Analysis and mitigatioin measures

International Journal of Construction Supply Chain Management ◽

10.14424/ijcscm402014-22-33 ◽

2014 ◽

Vol 4 (2) ◽

pp. 22-33 ◽

Cited By ~ 2

Author(s):

Jasper Mbachu ◽

◽

Samuel Taylor ◽

Keyword(s):

Risk Factors ◽

Data Analysis ◽

New Zealand ◽

Construction Industry ◽

Questionnaire Survey ◽

Risk Mitigation ◽

Descriptive Statistics ◽

Mitigation Measures ◽

Site Conditions ◽

Industry Analysis

While tendering for jobs, a contractor is expected to analyse the various risks in each prospective project and price them appropriately. Contingencies are included in the tender price to cater for the various risks based on their impacts on the project targets and profit margin. Currently in New Zealand (NZ), there is little or no information on the various contractual risks and their mitigation measures. This has led to contractors over compensating or under compensating for risks with costly consequences. This study aimed to establish priority contractual risks in the NZ construction industry, and their mitigation measures. The research was based on a questionnaire survey of consultants and contractors. Descriptive statistics and multi-attribute techniques were used in the data analysis. Results showed 21 risk factors which were segregated into 6 broad categories in diminishing levels of significance as follows: Site conditions, main contractor, pricing, subcontractor, external and client-related risks. Putting tags and conditions to risky price items in the tender bids, and transferring the risks onto other parties were analysed as the 2 most effective out of the 5 key risk mitigation measures identified. Being cautious of the priority risks and application of the identified effective risk mitigation measures could guide contractors and the project team to more appr

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LATE PAYMENT ISSUES OF SUBCONTRACTORS IN MALAYSIAN CONSTRUCTION INDUSTRY

PLANNING MALAYSIA JOURNAL ◽

10.21837/pm.v18i11.711 ◽

2020 ◽

Vol 18 (11) ◽

Author(s):

Roziha Che Haron ◽

Ahmad Lutfil Arazmi

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Research Methodology ◽

Questionnaire Survey ◽

Construction Projects ◽

Standard Form ◽

Survey Analysis ◽

Construction Companies ◽

Flow Problems ◽

Research Findings

The practice of efficient and timely payment in construction projects is a major factor that can contribute to the success of a project. Delays in payment to subcontractor(s) by main contractor and client on construction projects in the Malaysian construction industry is considered to be a significant factor of concern. It causes severe cash flow problems to subcontractor(s) and this condition may lead to a devastating impact to the contractual payment chain. Withholding or delaying payment creates financial hardship for the construction companies and its impacts are sometimes so harsh that some companies have to close down their services. The research methodology adopted was the questionnaire survey analysis based on thirty (37) respondents from selected main contractors and sub-contractors in Gombak, Selangor. The data and information were also gathered from interviews analysis. From the research findings, among the factor of late payment from the client is payment withhold by the client. Meanwhile, the factor of late payment from the main contractor is when the term of “pay when paid” is applied. To improve the payment situation, the findings of this study suggest that there must be dedicated enforcing provisions for payment delay in contracts. This is proposed by introducing the standard form of contract clause regarding payment between the main contractor and domestic subcontractor which include levying charges on overdue payments.

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LATE AND NON-PAYMENTS ISSUES IN THE MALAYSIAN CONSTRUCTION INDUSTRY: PERSPECTIVE OF BUILDING MATERIAL SUPPLIERS

Malaysian Journal of Sustainable Environment ◽

10.24191/myse.v6i1.8674 ◽

2020 ◽

Vol 6 (1) ◽

pp. 39

Author(s):

Mohd Fisal Ishak ◽

Kartina Alauddin ◽

Mohd Shahrol Hafiz Ibrahim

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Financial Management ◽

Building Material ◽

Building Materials ◽

Management Team ◽

Flow Management ◽

Cash Flow Management ◽

Main Effect ◽

Klang Valley

Payment in the Malaysian construction industry has generally been an issue of concern. Late and non-payment problem is endemic in construction and needs to be addressed. The aim of this study is to investigate the issues related to late and non-payment based on the building materials suppliers’ perspective. Questionnaires were distributed to suppliers of building materials in the Klang Valley. Findings from the study shows the main cause of late and non-payment is the paymaster’s poor financial management while the main effect of late and non-payment is problem with the cash flow. The most recommended possible solution to cope with the issue is for the paymaster to conduct training on financial and cash flow management to the management team in the company.

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Locking down behavioural compliance: The role of emotion and emotion regulation in breaches of COVID-19 mitigation measures in Aotearoa New Zealand

Journal of Health Psychology ◽

10.1177/13591053211029994 ◽

2021 ◽

pp. 135910532110299

Author(s):

Terise Broodryk ◽

Kealagh Robinson

Keyword(s):

Public Health ◽

Young Adults ◽

New Zealand ◽

Health Behaviours ◽

Mitigation Measures ◽

Aotearoa New Zealand ◽

High Knowledge ◽

The Cost ◽

Insight Into

Although anxiety and worry can motivate engagement with COVID-19 preventative behaviours, people may cognitively reframe these unpleasant emotions, restoring wellbeing at the cost of public health behaviours. New Zealand young adults ( n = 278) experiencing nationwide COVID-19 lockdown reported their worry, anxiety, reappraisal and lockdown compliance. Despite high knowledge of lockdown policies, 92.5% of participants reported one or more policy breaches ( M = 2.74, SD = 1.86). Counter to predictions, no relationships were found between anxiety or worry with reappraisal or lockdown breaches. Findings highlight the importance of targeting young adults in promoting lockdown compliance and offer further insight into the role of emotion during a pandemic.

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Zero Carbon Building Practices in Aotearoa New Zealand

Energies ◽

10.3390/en14154455 ◽

2021 ◽

Vol 14 (15) ◽

pp. 4455

Author(s):

Thao Thi Phuong Bui ◽

Suzanne Wilkinson ◽

Niluka Domingo ◽

Casimir MacGregor

Keyword(s):

Climate Change ◽

New Zealand ◽

Construction Industry ◽

Local Governments ◽

Early Stage ◽

Policy Implications ◽

Structured Interviews ◽

Building Projects ◽

Aotearoa New Zealand ◽

Zero Carbon

In the light of climate change, the drive for zero carbon buildings is known as one response to reduce greenhouse gas emissions. Within New Zealand, research on climate change mitigation and environmental impacts of buildings has received renewed attention. However, there has been no detailed investigation of zero carbon building practices. This paper undertakes an exploratory study through the use of semi-structured interviews with government representatives and construction industry experts to examine how the New Zealand construction industry plans and implements zero carbon buildings. The results show that New Zealand’s construction industry is in the early stage of transiting to a net-zero carbon built environment. Key actions to date are focused on devising a way for the industry to develop and deliver zero carbon building projects. Central and local governments play a leading role in driving zero carbon initiatives. Leading construction firms intend to maximise the carbon reduction in building projects by developing a roadmap to achieve the carbon target by 2050 and rethinking the way of designing and constructing buildings. The research results provide an insight into the initial practices and policy implications for the uptake of zero carbon buildings in Aotearoa New Zealand.

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Applications of Building Information Modeling in Cost Estimation of Infrastructure Bridges

International Journal of 3-D Information Modeling ◽

10.4018/ij3dim.2012040102 ◽

2012 ◽

Vol 1 (2) ◽

pp. 17-29 ◽

Cited By ~ 8

Author(s):

Mohamed Marzouk ◽

Mohamed Hisham

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Cost Estimation ◽

Building Information Modeling ◽

Cost Estimate ◽

Information Modeling ◽

Bridge Engineering ◽

C Language ◽

Building Information ◽

Bridge Information Modeling

Bridge Information Modeling (BrIM) is considered an innovation in bridge engineering and construction industry. This paper presents a methodology for using BrIM as an assisting tool in performing detailed cost estimates. The methodology depends on integrating visualization feature of BrIM with specific attributes of the BrIM model intelligent components. A program developed using C# language is used to extract the visualization conclusions and other components’ attributes to MS Excel spreadsheet. This sheet assists in performing detailed cost estimate, and reviewing the estimate. The paper also presents a methodology for generating cash flow and required payments. This methodology depends on integrating the developed program with 4D feature of BrIM.

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Dead Hand Proxy Puts and Hedge Fund Activism

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109018001424 ◽

2018 ◽

Vol 54 (4) ◽

pp. 1615-1642

Author(s):

Sean J. Griffith ◽

Natalia Reisel

Keyword(s):

Cash Flow ◽

Hedge Fund ◽

Cost Benefit ◽

Free Cash Flow ◽

Cross Sectional ◽

Flow Problems ◽

Banking Relationships ◽

Hedge Fund Activism ◽

The Cost ◽

Sectional Analysis

We investigate the Dead Hand Proxy Put, a contractual innovation in corporate debt agreements that may impact hedge fund activism. We find the provision principally in loans, not bonds, and provide evidence linking the adoption of the provision to hedge fund activism. Furthermore, controlling for endogeneity, we find that the provision significantly reduces the cost of loans. Bondholder wealth also increases. Moreover, cross-sectional analysis of share returns reveals that the provision is positively associated with repeat banking relationships and negatively associated with free cash flow problems, suggesting a cost-benefit tradeoff.

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Identification of Causes and Minimization of Delays in Highway Projects of Pakistan

Mehran University Research Journal of Engineering and Technology ◽

10.22581/muet1982.1901.09 ◽

2019 ◽

Vol 38 (1) ◽

pp. 103-112

Author(s):

Samiullah Sohu ◽

Abdul Fattah Chandio ◽

Kaleem ullah

Keyword(s):

Literature Review ◽

Construction Industry ◽

Questionnaire Survey ◽

Construction Projects ◽

Structured Interview ◽

Mitigation Measures ◽

Structured Interviews ◽

Highway Projects ◽

Mean Values ◽

Causes Of Delays

The problem of delay in construction industry is a regular phenomenon worldwide, and construction industry of Pakistan has no exception, particularly in highways projects. Delay can be described as the extension of time to complete the construction project. The aim of this paper is to identify main causes of delays in highway projects of Pakistan, and to determine mitigating measures for the identified causes. The research method of this study is based on literature review, questionnaire survey and semi structured interview. From in-depth literature review, twenty-six common causes of delay were found. A questionnaire survey was carried out among construction professionals of highway projects. The causes of delay in highways projects were ranked referring to their Mean values. A semi structured interview was carried out to determine mitigation measures for the top ten causes of delays. The data gathered from questionnaire survey was analyzed using SPSS (Statistical Package for the Social Sciences) while, data collected through semi structured interviews was analyzed using Nvivo software. The findings of this study are expected to be useful for construction parties, to mitigate the delays in highway construction projects of Pakistan.

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A Decade's Worth

Advances in Human Resources Management and Organizational Development - Cases on Learning Design and Human Performance Technology ◽

10.4018/978-1-7998-0054-5.ch010 ◽

2020 ◽

pp. 179-200

Author(s):

Ria Roy

Keyword(s):

Construction Industry ◽

Performance Improvement ◽

Cash Flow ◽

Employee Turnover ◽

Turnover Rate ◽

Improve Performance ◽

Deep Dive ◽

Construction Company ◽

Financing Costs

After witnessing a year-on-year growth of 50% since its inception in 1993, Ziggurat Developers was well on its way to being the next niche, technically sophisticated, and edgy construction company in Mumbai, India. This case takes a deep dive into how winning a prestigious construction contract in the country led to Ziggurat's loss of revenue, cash flow deficits, year-on-year losses, high financing costs, loss of banking, idling of resources, loss of credibility, and high employee turnover rate. Instead of these significant contracts providing a strong foothold in the construction industry, it destroyed Ziggurat and the recovery took a decade. Performance improvement is often the study of how to improve performance when discrepancies are confined to a silo or a subset of functions within an organization. But how do you get back to exemplary performance when you are boxed in and there is no way out?

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